UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 0-17626
Commission File Number 0-17853
SCOTTSDALE LAND TRUST LIMITED PARTNERSHIP
and
FFCA INVESTOR SERVICES CORPORATION 88-B
---------------------------------------------------
(Exact Name of Co-Registrants as Specified in Their
Organizational Documents)
Delaware 86-0588512
----------------------------------- ----------------------------
(Partnership State of Organization) (Partnership I.R.S. Employer
Identification Number)
Delaware 86-0588514
----------------------------------- ----------------------------
(Corporation State of Incorporation) (Corporation I.R.S. Employer
Identification Number)
The Perimeter Center
17207 North Perimeter Drive
Scottsdale, Arizona 85255
---------------------------------------- ----------
(Address of principal executive offices) (zip code)
Co-Registrants' telephone number including area code (480) 585-4500
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
SCOTTSDALE LAND TRUST LIMITED PARTNERSHIP
BALANCE SHEETS
JUNE 30, 2000 AND DECEMBER 31, 1999
(Unaudited)
June 30, December 31,
2000 1999
------------ ------------
ASSETS
LAND:
Held for sale $ 1,105,172 $ 5,109,126
Subject to sale agreements 1,744,690 3,118,364
Subject to sale agreement with affiliate 623,963 788,287
------------ ------------
Total land 3,473,825 9,015,777
LOAN RECEIVABLE FROM AFFILIATE -- 7,598,415
CASH AND CASH EQUIVALENTS 20,487,721 16,667,333
PREPAID EXPENSES AND OTHER 247,964 159,228
------------ ------------
Total assets $ 24,209,510 $ 33,440,753
============ ============
LIABILITIES AND PARTNERS' CAPITAL
DISTRIBUTION PAYABLE TO LIMITED PARTNERS $ 16,679,590 $ 14,314,676
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 156,327 163,786
------------ ------------
Total liabilities 16,835,917 14,478,462
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General partner 11,673 (3,844)
Limited partners 7,361,920 18,966,135
------------ ------------
Total partners' capital 7,373,593 18,962,291
------------ ------------
Total liabilities and partners' capital $ 24,209,510 $ 33,440,753
============ ============
1
<PAGE>
SCOTTSDALE LAND TRUST LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------- -------------------------
6/30/00 6/30/99 6/30/00 6/30/99
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Land sales $ 9,633,413 $ -- $16,237,212 $ --
Interest on loan to affiliate 70,958 212,500 283,458 425,000
Additional interest from affiliate 1,130,058 -- 1,130,058 --
Interest on investments and other 234,850 21,323 423,562 46,336
----------- ----------- ----------- -----------
11,069,279 233,823 18,074,290 471,336
----------- ----------- ----------- -----------
EXPENSES:
Cost of land sales 2,971,523 -- 6,429,666 --
General partner fees 31,033 62,536 75,913 124,386
Property management fees 9,000 9,000 18,000 18,000
Marketing -- 2,836 -- 8,549
Property taxes 11,358 38,634 31,867 89,429
Other operating 69,094 77,203 159,628 132,618
----------- ----------- ----------- -----------
3,092,008 190,209 6,715,074 372,982
----------- ----------- ----------- -----------
NET INCOME $ 7,977,271 $ 43,614 $11,359,216 $ 98,354
=========== =========== =========== ===========
NET INCOME ALLOCATED TO:
General partner $ 13,154 $ 436 $ 15,517 $ 984
Limited partners 7,964,117 43,178 11,343,699 97,370
----------- ----------- ----------- -----------
$ 7,977,271 $ 43,614 $11,359,216 $ 98,354
=========== =========== =========== ===========
NET INCOME PER LIMITED
PARTNERSHIP UNIT (based on
50,000 units held by limited partners) $ 159.28 $ .86 $ 226.87 $ 1.95
=========== =========== =========== ===========
</TABLE>
2
<PAGE>
SCOTTSDALE LAND TRUST LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Limited Partners
General ----------------------------
Partner Number Total
Amount of Units Amount Amount
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1999 $ (3,844) 50,000 $ 18,966,135 $ 18,962,291
Net Income 15,517 -- 11,343,699 11,359,216
Distribution to Limited Partners -- -- (22,947,914) (22,947,914)
-------- ------ ------------ ------------
BALANCE, June 30, 2000 $ 11,673 50,000 $ 7,361,920 $ 7,373,593
======== ====== ============ ============
</TABLE>
3
<PAGE>
SCOTTSDALE LAND TRUST LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 11,359,216 $ 98,354
Adjustments to net income:
Gain on sale of property (113,298) --
Change in assets and liabilities:
Decrease in land held for sale 4,003,954 2,200,287
Decrease (increase) in land subject to sales agreements 749,711 (2,200,287)
Decrease (increase) in prepaid expenses and other (88,736) 67,600
Increase (decrease) in accounts payable and accrued
expenses (7,459) 5,977
------------ ------------
Net cash provided by operating activities 15,903,388 171,931
------------ ------------
CASH FLOW FROM INVESTING ACTIVITY:
Receipt of loan payoff from affiliate 7,598,415 --
Proceeds from sale of property to affiliate 901,585 --
------------ ------------
Net cash provided by investing activities 8,500,000 --
------------ ------------
CASH FLOWS FOR FINANCING ACTIVITIES:
Limited partner distributions declared (22,947,914) --
Increase (decrease) in distribution payable 2,364,914 (441,000)
------------ ------------
Net cash used in financing activities (20,583,000) (441,000)
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 3,820,388 (269,069)
CASH AND CASH EQUIVALENTS, beginning of period 16,667,333 2,292,149
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 20,487,721 $ 2,023,080
============ ============
</TABLE>
4
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Scottsdale Land Trust Limited Partnership (the Registrant) received
$50,000,000 in gross proceeds from its public offering of the Units on November
23, 1988. After deducting organizational and offering expenses, the Registrant
had $43,250,000 in net proceeds available for investment. The net proceeds were
used to purchase the property (The Perimeter Center), fund the construction of
the infrastructure and fund the $8.5 million loan to Franchise Finance
Corporation of America (FFCA), in accordance with the partnership agreement. In
May 2000, the entire principal balance of the loan was paid in full by FFCA
together with accrued interest and additional interest in the amount of $1.13
million (as discussed below). The Registrant's primary sources of revenue have
been land sales, interest payments received from FFCA under the loan agreement
(interest payments were made through May 1, 2000, at which time the loan was
paid in full) and interest earned on the Registrant's temporary investments. As
land parcels are sold, distributions of the net cash sale proceeds are made in
accordance with the partnership agreement. Once all of The Perimeter Center
parcels are sold, the Registrant will liquidate and distribute its assets in
accordance with the partnership agreement. As of July 31, 2000, all land parcels
were sold or are under contract for sale. A proxy statement was filed with the
Securities and Exchange Commission in April 2000, requesting an investor vote on
the sale of an additional land parcel to FFCA and on the dissolution of the
partnership upon sale of the remaining parcels under contract. Both proposals
passed during the quarter ended June 30, 2000. Cash reserves remaining in the
Registrant total approximately $3.7 million. These reserves may be used from
time to time to pay amounts assessed by city or county taxing authorities for
developmental or other costs.
During the quarter ended June 30, 2000 (the "period"), the Registrant
closed one land sale transaction, representing 16.67 acres, to an unaffiliated
third party. This land sale transaction provided cash sale proceeds of
approximately $8.7 million. The parcel had a total original cost of $1.6 million
and closing and other costs (including broker commissions) of approximately
$547,000. This parcel sale resulted in a gain totaling approximately $6.5
million. Also in the second quarter, the Registrant received $8.5 million on the
payoff of the principal balance of the FFCA loan, together with accrued interest
and additional interest of $1.13 million. Upon FFCA's payoff of the loan, the
Registrant recognized the sale of the original FFCA land parcel. The $8.5
million loan payoff included approximately $900,000 of land sale proceeds. The
original cost of the FFCA parcel was approximately $788,000, resulting in a gain
of approximately $112,000. Distributions payable from the parcel sale to the
unaffiliated third party and the loan principal payoff amounted to approximately
$16.7 million for the period.
At July 27, 2000, the three remaining land parcels (approximately 17 acres)
were all under contract for sale at prices aggregating approximately $9.2
million. The original cost of these three parcels totaled approximately $3.5
million. Two of the parcels are under contract with unaffiliated third parties
and one parcel is under contract with FFCA. The FFCA contract was entered into
on February 7, 2000, to purchase a parcel (approximately 3.6 acres) adjacent to
its corporate headquarters. This related party sale has been approved by a vote
of the limited partners of the Partnership. Since the contracts with the
unaffiliated parties are subject to a due diligence process, the Registrant
cannot predict which, if any, of the contracts will result in the sale of a land
parcel or the timing or the amount of any future cash distributions. Once the
remaining parcels are sold, the Partnership will liquidate and distribute its
assets in accordance with the partnership agreement.
Revenues totaled approximately $11.1 million for the quarter ended June 30,
2000 as compared to approximately $234,000 for the comparable quarter in 1999.
Total revenues for the six months ended June 30, 2000 were approximately $18.1
million as compared to approximately $471,000 for the same period in 1999.
Revenues in 2000 were higher because land sales comprised the majority of the
revenues in 2000 and there were no land sales during the first six months of
1999. Interest income on the loan to an affiliate had a net decrease of
approximately $142,000 as compared to the second quarter of the prior year due
to the payoff of the loan on May 1, 2000, resulting in the Registrant receiving
one month's interest during the quarter as compared to a full quarter of
interest reported in the comparable quarter of 1999. The payoff of the FFCA loan
to the Registrant also resulted in payment of additional interest from affiliate
5
<PAGE>
of approximately $1.13 million. Interest on investments and other income for the
period increased by approximately $214,000 from the comparable quarter of the
prior year due to the increase in temporary investment securities held during
the period. The higher cash balance in 2000 resulted from net land sale proceeds
held during the quarter prior to distribution of the cash to the limited
partners. Total expenses (excluding the cost of land sales) for the quarter
ended June 30, 2000 decreased by approximately $70,000 from the comparable
quarter of the prior year. Year to date expenses (excluding the cost of land
sales) show a similar decrease from the comparable period of the prior year.
These decreases were primarily due to lower property taxes and lower general
partner fees. Property taxes decreased due to the sale of land parcels. The
general partner fee decreased from the comparable period because the fee is
based on Assets Under Management, as defined in the partnership agreement, and
as parcels are sold the general partner fee is reduced accordingly. These
reductions were partially offset by an increase in costs related to the proxy
statement filed in April 2000.
In the opinion of management, the financial information included in this
report reflects all adjustments necessary for fair presentation. All such
adjustments are of a normal recurring nature.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The financial instruments held by the Registrant at June 30, 2000 consist
of cash equivalents. The Registrant intends to hold the investments to maturity;
therefore, these financial instruments do not subject the Registrant to a
material exposure to changes in interest rates.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A Notice of Consent Solicitation and a Consent Solicitation Statement, both
dated May 12, 2000, were sent to the investors. No meeting was held in
connection with the Consent Solicitation or Consent Solicitation Statement. The
following table sets forth each of the items that the investors were asked to
vote upon and the results of the vote as of June 26, 2000, the date on which the
Consent Solicitation was terminated:
Proposal Results
-------- -------
1. A proposal to sell a parcel of land to a For 26,873
related party Against 1,186
Abstain 722
2. A proposal to terminate and liquidate the For 27,800
Partnership when all remaining unsold parcels Against 390
have been sold. Abstain 591
6
<PAGE>
FFCA INVESTOR SERVICES CORPORATION 88-B
BALANCE SHEET - JUNE 30, 2000
ASSETS
Cash $100
Investment in Scottsdale Land Trust Limited Partnership, at cost 100
-----
Total Assets $ 200
=====
LIABILITY
Payable to Parent $ 100
-----
STOCKHOLDER'S EQUITY
Common Stock; $l par value; 100 shares authorized,
issued and outstanding 100
-----
Liability and Stockholder's Equity $ 200
=====
Note: FFCA Investor Services Corporation 88-B (88-B) was organized on
August 11, 1987 to act as the assignor limited partner in Scottsdale Land Trust
Limited Partnership (SLT). The assignor limited partner is the owner of record
of the limited partnership units of SLT. All rights and powers of 88-B have been
assigned to the holders, who are the registered and beneficial owners of the
units. Other than to serve as assignor limited partner, 88-B has no other
business purpose and will not engage in any other activity or incur any debt.
7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
SCOTTSDALE LAND TRUST LIMITED PARTNERSHIP
By FFCA MANAGEMENT COMPANY LIMITED
PARTNERSHIP
General Partner
By PERIMETER CENTER MANAGEMENT COMPANY
Corporate General Partner
Date: August 4, 2000 By /s/ John Barravecchia
-----------------------------------------
John Barravecchia, Executive Vice
President, Treasurer and Chief Financial
Officer
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
co-registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FFCA INVESTOR SERVICES CORPORATION 88-B
Date: August 4, 2000 By /s/ John Barravecchia
-----------------------------------------
John Barravecchia, President, Secretary
and Treasurer, Chief Financial Officer
9
